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Media! What is it good for?
11 June 2019
The media can unearth insights about far-flung EM investment grounds. However, it can also manipulate by fuelling exuberance or fermenting panic. We quantify returns from investing directly in response to media frenzies and troughs. We find that investors make positive alpha if they buy EM bonds and stocks during EM media frenzies. Since media frenzies revolve around bad news, it is likely that the media over-hypes bad news to the point where many investors oversell, thereby creating value.